DISTRICT COURT OF QUEENSLAND

This is an application under r. 926 for an order that the defendant be dealt with for contempt.  The application was on the basis that the defendant had failed to comply with an order which I made on 1 October 1999.  On that day I ordered by consent:

“1. That an injunction be hereby granted and the defendant be restrained as follows:

1. (a)
   the defendant cause a recorded message to be installed on Toowoomba telephone number 4639 4822 as follows:

“Thank you for calling 4639 4822.  If you wish to speak to “Business Central” please phone 4659 5200 otherwise hold the line and we will answer the phone now”.

2. (b)
   That the defendant cause the recorded message to be placed on Toowoomba phone number 4639 4822 as from Monday 4 October 1999 and to continue to operate until the publication and distribution of the new 2000 Toowoomba telephone book in the White and Yellow pages.”

The plaintiff alleged that the defendant deliberately breached that order, by not placing that recording on that telephone line, but instead having it disconnected. 

Background

The action was commenced by claim filed on 23 September 1999 by which the plaintiffs claimed various relief including:

“(1)  an injunction to restrain the defendant from engaging in misleading and deceptive conduct concerning the use of telephone number 4639 4822 and/or telephone number 4639 1944;

3. (2)
   …

(3) an injunction requiring the defendant to engage a Telstra answering service to answer telephone numbers 4639 4822 and 4639 1944 so as to make it clear that any caller wishing to contact the plaintiffs or their business “Business Central” or “Toowoomba Business Central” should further telephone such number as may be specified and that any caller wishing to contact the defendant or any of her businesses should further telephone such number as be specified, the cost of such service to be borne equally by each party.”

On the same day there was filed an application seeking such injunctions until the trial of the action, and injunctions restraining the defendant from passing off her business as that of the plaintiffs and requiring her to return certain keys to the plaintiffs.  It was that application which came before me on 1 October 1999.  On that occasion both sides were represented by counsel, there was some argument about material, and I gave a ruling refusing to dispense with the rules of evidence under r. 394 in respect of certain material, and ruling it inadmissible.  There was then some argument about whether injunctions should be granted, after which I adjourned for lunch;  following that adjournment I was informed that the matter had been settled and I made by consent the order in the terms already set out.

The action has moved on a little since then;  an amended claim was filed on 29 October 1999, but seeking the same relief although claiming specific amounts by way of damages, as should have originally occurred.  There was no other change to the pleading.  Particulars of the Statement of Claim were filed the same day. The particulars failed to provide any rational justification for the quantification of those damages at $60,000. A Notice of Intention to Defend and Defence was filed on 15 December 1999.  A reply was filed on 24 December 1999.  The application to punish the defendant for contempt was filed on 22 December 1999, and adjourned from time to time until it came before me on 13 March 2000. 

It emerges from the pleadings that the plaintiffs are the owners of a building at 136-140 Russell Street, Toowoomba where serviced offices are provided to members of the public.  In January 1997 the defendant began to conduct a secretarial service from one of those offices, and began to take telephone inquiries from members of the public interested in taking such office space.  The building is known as “Toowoomba Business Central” or “Business Central”.  For the purpose of the defendant’s businesses she had two telephone numbers connected to her office, 4639 4822 and 4639 1944.  In 1998 the defendant placed an advertisement for these premises in the Yellow Pages, using telephone number 4639 1944, with, she alleged, the knowledge and consent of a director of the first plaintiff. This the plaintiffs denied.  She also caused entries to be placed in the Toowoomba White Pages under the name “Business Central” of 136 Russell Street, Toowoomba for the number 4639 4822, and a similar entry in the Yellow Pages;  she alleged that these were made with the knowledge and consent of the same director of the first plaintiff.   Again, this was denied. It was also alleged that there were entries in the “Big Colour Pages” directory in respect of number 4639 1944, but the defendant denied that this was as a result of anything she did. The entry in the “Big Colour Pages” is the same as the entry in the White Pages, and may just have been copied from it.

In June 1999 the defendant vacated the premises she had occupied;  she said at the direction and demand of that director of the first plaintiff.  She alleged that up until then the process of letting rooms in that building to members of the public was operated by her. When the defendant vacated the premises the two numbers referred to earlier were initially transferred to her residence, and subsequently to premises at 256 Margaret Street, Toowoomba.  The plaintiffs alleged that the defendant has engaged in passing off and/or misleading and deceptive conduct and/or the making of false and misleading representations, by receiving calls from members of the public wishing to make contact with the plaintiffs and attempting to sell them space in premises run in competition with those of the plaintiff, without advising them of the true identity and capacity of the person to whom they were speaking, so as to leave such people with the impression that they were dealing with the plaintiffs or with a business which had the sponsorship approval or affiliation of the plaintiffs, and had passed off her services as those of the plaintiffs.  The defendant denied that she had done this, and alleged that she has always identified her business by a name different from that used by the plaintiff, and advised that she had no serviced offices at 136-140 Russell Street, Toowoomba.  The plaintiffs alleged that as a result of this conduct they have suffered loss and damage;  this is also in issue. 

The plaintiffs also alleged that the defendant had collected five cheques which were payable to the plaintiff but has converted these to her own use or refused to account for the proceeds, and that the defendant has retained keys to different serviced offices and refused to return them.  These allegations are also in issue;  for present purposes it is not necessary to discuss these aspects of the dispute further. 

It emerges from the affidavit evidence filed in support of the original application for injunction that there was initially an amicable business arrangement between the plaintiffs and the defendant. It seems that while she was there she was effectively acting as manager of the premises, and there was no separate telephone to the building operated by the plaintiffs.  The defendant was allowed to handle inquiries for office space, and was providing a secretarial service to the tenants of the plaintiffs’ office so that they were obtaining serviced office space, for which they made one payment apparently collected by the defendant, with the payment then being divided between the parties. The defendant in her affidavit said that the arrangement was that, as each customer wanting to occupy some serviced office space came along, she took a lease of the relevant part of the premises from the plaintiffs and then sub-let that area to the customer.  Unfortunately, the relationship broke down.

According to the defendant, this occurred  in February 1999 when the plaintiff refused to enter into head leases in favour of the defendant in respect of tenants that she had obtained for the premises.  She claimed that the plaintiffs wanted her to enter into a management agreement to manage the centre for a salary.  In April she arrived at work to find tradesmen about to undertake certain work on the premises which would have prevented her from carrying on her business.  On 20 April 1999, Derrington J in proceedings in the Supreme Court with the defendant as plaintiff, the first plaintiff as first defendant and the director of the first plaintiff as second defendant, restrained the defendants from interfering with the plaintiff’s right of quiet enjoyment of her premises, or from removing any wall telephone system, electrical supply or in any other way interfering with those things at the plaintiffs premises. 

There was subsequently a mediation of the Supreme Court proceedings on 18 May 1999;  the defendant says that heads of agreement were reached but the plaintiffs reneged on that agreement.  On 1 June she was told to leave the plaintiffs’ premises, and on 2 June she was not allowed to enter her office.  It was as a consequence of this that she transferred the telephone numbers first to her home and subsequently to new business premises, where she is operating a business of providing serviced offices similar to that which was formerly provided by the plaintiffs and the defendant together at the plaintiffs’ premises.

The defendant said that the phone number 4639 1944 had been the principal number she had used for her secretarial service;  the number 4639 4822 was associated with an employment agency that she operated, although it was also used at times for other things such as telemarketing, or as an answering service for clients with their own businesses.  She said that after she moved out she had cancelled the entries in the White and Yellow pages referring to “Business Central” and I was told on 13 March that the new telephone directory has been distributed so that problems about having the defendant’s numbers attributed to the plaintiffs’ premises in the telephone directory have gone away, and my injunction has expired.

There was evidence by two individuals of conversations they had when they telephoned the defendant’s number wanting to talk about “Business Central”;  she gave a somewhat different version of those conversations in her affidavit.  Obviously this conflict cannot be resolved by looking at the affidavits. 

Preliminary Issues

There was a preliminary issue raised in relation to the question of whether the defendant was bound by the order, not having been served with it.  Rule 904(1) requires a non-money order to be served personally on the person against whom the order is to be enforced before it can be enforced by contempt proceedings. It was common ground that the defendant has never been served personally with the order. But there is an exception in subrule (2) if the person was present when the order was made.  The defendant was present in court when I made the order on 1 October 1999.  It is true that on that occasion I asked counsel to prepare a draft order which was acceptable to both of them, and there was a delay of some days before an order signed by both counsel was received by my associate, following which I signed the draft and the file was forwarded to the Registry where the order was taken out.  But the terms of the order were written out in my book on 1 October  and it follows that I made an order in those terms that day in court,  with the request that a draft be submitted simply as a matter of administrative convenience.  That is confirmed by the transcript of proceedings on 1 October.  Accordingly, there was an order made at a time when the defendant was present and it was not necessary for her to be served prior to enforcement. The order took effect that day: r. 660(2).

It was also submitted that the plaintiffs had failed to comply with r. 665, because the order as taken out did not have the statement required by subrule (3).  Such a statement is a precondition to enforcement when it is required:  Commissioner of Water Resources v. FEDFA [1988] 2 Qd.R. 385 at 387.  But that subrule must refer to an order which is served, which was at one time also always required.  Since by r. 904(2) an order can in some circumstances be enforced although not served, in my opinion it must follow that when it applies a failure to comply with r. 665(3) is irrelevant, indeed inevitable, and therefore not a bar to enforcement of the order.

Analysis

It seems clear that no recording as required by my previous order was in fact placed on the Toowoomba telephone number 4639 4822 as from Monday 4 October 1999.  The plaintiffs’ solicitor has deposed to a telephone conversation on 6 October 1999 with the solicitor for the defendant and advice in that conversation that the defendant had reconsidered her position over the weekend and had decided that she was not prepared to arrange for the recorded message and had instead had the number disconnected.  The fact that that admission was made was not directly disputed in the affidavit of the defendant’s solicitor which was read before me, and the defendant’s affidavit does not directly assert to the contrary, saying merely that “As I had decided that I would no longer be using telephone number 4639 4822 I contacted Telstra and had that number disconnected.”  No explanation was given as to why the various practical reasons set out in para. 42 of the defendant’s earlier affidavit sworn on 30 September 1999, for not depriving the defendant of the use of this number, no longer applied. 

I accept that there must be a deliberate breach of the order rather than a casual accidental or unintentional breach before the breach will amount to contempt of court: AMIEU v. Mudginberri Station Pty Ltd (1986) 161 CLR 98.  I also accept that I must be satisfied beyond reasonable doubt that the defendant has acted deliberately in breach of the order before I can make a finding that she was in contempt of court.  In all the circumstances, however, I am satisfied that there was a deliberate breach of the order which had been made, and indeed to which the defendant had consented, on 1 October 1999 and therefore find that the plaintiff was in contempt of court. 

It does appear however that after taking legal advice the defendant fairly rapidly sought to rectify the default, but was prevented from doing so by an inability to have the number reconnected. This must have been on or before 6 October 1999.  At this point there seems to have been some confusion involving Telstra as well, and the attempts to reconnect the number were delayed because, when Mr. Battle discovered that the number had been disconnected, he applied to have it transferred to the first plaintiff.  In the period covered by the affidavits it seems that the number was never properly reconnected, at least not to the defendant.  Sometimes if someone rang the number they obtained a Telstra recording, to the effect that it was disconnected, sometimes it seemed that a telephone was ringing but the number just rang out without anyone answering it.  There is no evidence that it was ever effectively reconnected to the defendant who did make some inquiries about taking the steps necessary to give effect to the order. This difficulty was apparently continuing at the time when the injunction would have expired anyway.

It was submitted on behalf of the defendant that the order did not in terms require the defendant to maintain the number in operation, but it seems to me that, although this is not expressed, it does follow from the order as a necessary implication.  The number has to be maintained for the order to be obeyed. It was also submitted that the plaintiffs had waived the requirement by steps taken by them to obtain the benefit of the number themselves, and by inviting the defendant to co-operate in arranging this.  But I do not think that that amounted to waiver, although the plaintiffs’ conduct is relevant to the circumstance that the defendant was prevented from promptly remedying the breach, as she was apparently attempting to do. 

Penalty

By r. 930, if the court decides that the respondent has committed a contempt the court may punish the respondent by imprisonment or a fine, or making an order that may be made under the Penalties and Sentences Act 1992.  It was submitted on behalf of the plaintiff that the appropriate course was to impose a fine, and for an order that the defendant pay the plaintiffs’ costs. Certainly no more severe penalty is justified.  It appears however on the authorities that there is a discretion not to impose a specific penalty, even if a party is found guilty of contempt in failing to comply with an order of the court:  see Australian Competition and Consumer Commission v. Australian Business Reports Pty Ltd [1997] ATPR 44,004;  Marron v. Salvemini [1969] WAR 178. 

In relation to penalty it seems to me that the following considerations are of significance.  First, the defendant does not seem to have taken very seriously, at least initially, the fact that placing this recording on the telephone system was not only something that she had agreed to do, but something she had been ordered to do by a court.  Second, the plaintiff attempted to remedy the situation quickly thereafter once she had the benefit of legal advice.  Third, she was prevented from doing so promptly essentially as a consequence of the actions of the plaintiffs and of Telstra.  It is difficult to believe that this application would have been made if the service had been successfully reconnected on 6 October and the recording then placed on the line. 

Fourth, the disconnection of the telephone did not deprive the plaintiffs of anything to which they were entitled other than under the order.  The telephone service was the defendant’s, and there is nothing alleged in the Statement of Claim which would provide any basis justifying any order that the service be transferred to the plaintiffs.  It seems to me that the plaintiffs’ only legitimate concern is that the defendant should not be passing off her business as that of the plaintiffs, or engaging in misleading and deceptive conduct by making representations, to people who telephone as a result of the advertisement, that is to say her not using the telephone service as an opportunity to damage the plaintiffs’ business.  But the defendant, it seems to me, would have been entitled to have disconnected these numbers, or to have left them connected and never answered them, and the plaintiffs in those circumstances would have had no cause for complaint.  The function of the order to require a recording to be placed on the line was really to insulate the plaintiffs from the risk of the alleged conduct being continued, something which could have been achieved just as readily by disconnecting the service, or not answering it.  The plaintiffs did not have, in my opinion, a right to have the benefit of these telephone services, and insofar as that was conferred incidentally by the operation of the order in accordance with its terms, that was not the purpose of the order. 

On the whole I regard this as a technical and essentially fairly minor breach of the order, and one which does not deserve any punishment additional to an order for costs in relation to the application.  Indeed, even that order would place on the defendant a substantial burden, more of a burden than is really justified by the nature and degree of wrongdoing involved. 

Costs

I acknowledge the force of the arguments supporting an order for costs in favour of the plaintiffs, particularly in circumstances where no other penalty is being imposed.  However, that will not change if the costs are reserved to the trial judge.  That judge will be in as good a position to appreciate them as I am, particularly with the benefit of these reasons, but will have the advantage presently denied to me of having a clearer understanding of the rights and wrongs of the whole dispute.  Just on the basis of reading the affidavits, I am inclined to be sympathetic towards the defendant, but I recognise that affidavits are an insecure foundation for such a view, and the position will be much clearer after there has been a full trial.  The limited cross-examination before me was too specific to enable a more general appreciation of the rights and wrongs of the dispute. 

I am also concerned that making an order for costs now may make it more difficult for this matter to be settled, and it does seem to me that it is a matter which ought to be settled, since the substance of the dispute would not, I think, justify the costs involved in litigating it.  It should be possible to identify any customers in fact diverted to the defendant’s premises, and thus quantify any loss.  Even if the defendant was for a short time abstracting some potential customers from the plaintiffs, it is difficult to believe that they would have lost much business as a result, and there may well have been some loss of business anyway as a result of the breakup of the relationship between the plaintiffs and the defendant.  I will not order mediation given that a mediation of the dispute ordered by the Supreme Court has been unsuccessful, but I would encourage the parties to make further efforts to resolve the matter without the further expense of litigation.  The additional disadvantage of having to litigate the matter twice, in the Supreme Court and District Court, will be obvious. 

In the light of both of these considerations, I think the preferable course is for me at this stage to reserve the costs of the application, including the costs reserved by His Honour Judge Noud on 24 January 2000, to the trial judge.  Accordingly, the orders that I make are:

A: Find the defendant guilty of contempt of court.

B: Decline to impose any specific penalty.

C: Reserve the costs, including reserved costs, of the application to the trial judge.